HELOCs-in-First

By 2005 or so I had been rehabbing homes part time to full time for 7 years. I had completed and rented two two unit properties and two single family homes. I had converted one of the Two Unit properties into Condo's with a Condo Conversion and I was getting ready to go on a buying spree.

I was considering a cash out refinance when I was introduced to Home Equity Lines of Credit. I reviewed the open ended credit product and asked my Local Banking Branch Manager a simple question.

"Can I get one of these in First position instead of Second?"

"I want to refi my entire home into one of these."

And she said "Sure you can". And the rest is one Hell of a story for the History Books. ( add link here )

Fast forward 15 years and it's now October 2020.

We are about 8 months into the COVID debacle and the housing market is on fire. It's as if rates were dropped to keep all those who have equity and money occupied as the Media Megaphone and the Three Ring Political Circus proceed to bamboozle the masses.

Since the odd conversion of my largest and last open HELOC in 2016, I've been dreaming of the day when I could become my own banker again.

I found Michael Lush's "Replace Your Mortgage" Educational Program for HELOC's in 2017 or so. I read all his promo material in one evening to gain an understanding of what he was doing. I didn't need the education. What I needed was the Bank List he was providing to those who bought into his Educational Program.

Michael had taken the time to gather data on hundreds upon hundreds of Small and Mid Size banks who actively promoted HELOC's in First Position and he distributed that list to those folks who bought into his group at the higher level (the Platinum Level). The education only without the Bank List was about $2000 as I recall an the education with access to the Bank List for life was $4000. I reached out to his group for a screening call. Some folks who are do-it-yourselfers may think this sounds steep. If you are fortunate enough like I was to get one on your first try the first time, you don't need his group. If however you try for days or weeks to find banks to do it and you value your time, and you have the money to join, just join.

Getting these is not always easy and it make take several try's at several banks you've never heard of before. There is no "standard product" like the 30 year fixed rate closed in mortgage, so you will need to learn quite a bit about these products to get one that works best for you.

When I got the Bank List, I reviewed the tab for investor HELOCs. I was surprised to find one company that stood really far out from the rest. Their product looked really quite different from all the rest. And given my prior experience, it looked like it had features that I would really appreciate.

There were some origination fees and even an annual fee with it, which was unlike other HELOC's but those were nothing compared to the product itself. The product looked Golden.

There was a primary contact listed in the Banking List for this company I was so interested in. I sent him an email and I was very excited when I got a response from him a few hours later, at Midnight East Coast time. He replied with a "Caveat" that I was totally fine with. A day or two after initial contact we had a phone call.

Unfortunately, it just went "okay".

During the call he revealed he was not Licensed to do Business in Maryland but he could run it through a Licensed Maryland LO. Frankly I wasn't too keen on that for several reasons, but it sounded like common practice for them so I didn't ask for a straight referral to a MD LO at that time.

Some other things transpired in the first conversation that I struggled with too. It was very apparent he had a lot of experience in the industry and he felt like he had a lot of experience with the product.

If I recall, he seemed a little taken back that I had figured out how to do this long before he was in the business promoting this "program" for the "something special" it really is.

We also hit a bump at the end of the conversation about co-borrowers during underwriting which I found odd. The question I asked was about something that I knew transpired regularly in the underwriting process nationally but he wasn't able to follow my question or the the gist of the answer I was trying to get clarity on. That was one of the pieces that made me feel more uncomfortable.

I asked if he was okay with email for dialogue, indicating that was my preferred method for communication so I never lost important information and to avoid confusion during complex business processes, and said he preferred email, so away we went.

I asked some questions. The reply took a bit longer than I would have thought and when it came in it was short and concise. Unfortunately it was so concise I didn't quite get the clarity I was looking for. There was term in there that sounded familiar, but he separated it as if the suggested answer I had given wasn't correct. Given I hadn't gone through a proper, formal underwriting process for 8 years or more I was a little rusty.

I sent a reply back that should have required a 1-2 minute response if that, and it's as if it went into a Black Hole.

Needing to get my Refinance going, I tried calling him. I got his voicemail.

On his voicemail he made it clear if you had a loan in process you could leave a message but if you did not you should schedule a phone call with him at a website he provided. I actually prefer scheduling calls so I appreciated this. He had an opening for early the next day.

When we got on the phone I could tell he was annoyed. He felt he had answered my question with his first email reply. I indicated that if I had understood it clearly I would not have replied asking for more clarity? I felt odd have to have this much dialogue over an email that could have been clarified with a one to two sentence response.

At that point things got bumpy. I made it clear I was aware that LO's around the country were slammed with business and that I had not desire to consumer any more time of his than I had too. I told him one LO I had spoken with told me he had 25-30 deals in process. He replied to that indicating he had the same... and that didn't make me feel good at all.

With that much business in his funnel, he wasn't going to give a sh-t about my deal.

We agreed to a process for moving forward with a Loan Application. I told him I'd be very concise and on target and that everything would come in numbered in a way that should make things very easy for him to review my docs.

I sent out three emails... and that's where the "Loan App Process" picks up...